AMERICAN FORK, Utah—Platinum Protection has defaulted on a promissory note of more than $10 million that it agreed to pay when it bought out the company’s startup investors in 2011, a recently filed lawsuit charges.

AMERICAN FORK, Utah—The large, dramatic letters emblazoned across the top of the imposing new office building here used to read “Platinum.” Now they say “AMP”—because financially beleaguered Platinum Protection has vacated the space and it is now AMP’s headquarters.

AMERICAN FORK, Utah—CPI Security Systems, a Charlotte, N.C.-based monitoring company, is suing Platinum Protection, claiming Platinum has defaulted on a $700,000 loan CPI made to the company in January.

AMERICAN FORK, Utah—Platinum Protection, a leading summer-sales-model security company based here, reportedly laid off almost all its employees on Feb. 2, including corporate staff, sales representatives and technicians.

I wrote last week about Platinum Protection suddenly laying off most of its employees. I’m still gathering information about what led to that abrupt Feb. 2 action by the summer model sales company based in American Fork, Utah, and want to make sure I have as many facts as possible before publishing a story.

I’ve yet to hear from anyone at Platinum in response to requests for comment. I’m told by a knowledgeable company insider—an employee who was among some 600 corporate, sales, technical and other staff let go last week—that the company kept on five or six employees to try to figure out what to with about 6,000 accounts that Platinum kept in house.

However, this person said the company at this point doesn’t have the finances or personnel to continue with its plans to bring on about 25,000 accounts this summer, as it did last summer. “You lose your sales force, you lose your entire company,” the employee told me. Other summer sales companies are busy signing up some of Platinum’s former sales reps and technicians, the person said.

The person said a company owner announced to employees last Thursday, “I’m sorry to tell you this, but Platinum is closing its doors and all employees are terminated effective immediately and I’m really sorry this happened.”

The employee said: “People were bawling. They had never been through something like this before. They didn’t know you could have a job for years and all of a sudden they tell you, ‘Sorry, you’re done.’ … There’s no severance, no nothing.”

I’m still digging into whether this had anything to do with a recent lawsuit filed by the Securities and Exchange Commission, charging that the two men who provided the start-up capital for Platinum six years ago have been running a $220 million Ponzi scheme.

Platinum has stressed that Utah real estate magnate Wendell Jacobson and his son, Allen Jacobson, are no longer owners of the company, which was founded in 2006.

But what I’m hearing is that negative publicity generated by the lawsuit, filed this past December, did nothing to help Platinum financially.

Word is that Platinum Protection suddenly laid off almost all its employees yesterday. So, is the summer model sales company based in American Fork, Utah closing, filing for bankruptcy? And does this abrupt action have anything to do with a recent lawsuit filed by the Securities and Exchange Commission, charging that the two men who provided the start-up capital for Platinum six years ago have been running a $220 million Ponzi scheme?

The industry is abuzz with such questions since the massive layoff yesterday. I haven’t yet heard directly from anyone at the company about what is going on. But The Salt Lake Tribune reported yesterday evening that a company official confirmed Platinum had dismissed 65 corporate employees and its sales and technical staff, leaving only a small management team to service existing customers. The official wouldn’t give the reason for the mass dismissal, the newspaper said.

Regarding the SEC lawsuit filed in December, Platinum has told SSN that it was as surprised as anyone about the accusations against Utah real estate magnate Wendell Jacobson and his son, Allen Jacobson, and said the pair no longer has any ownership in the company. But could some sort of negative fallout from the case have impacted Platinum’s financing?

There are many more questions than answers at this point.

As for the layoffs, I talked yesterday to one of the employees just let go.

The person, who didn’t want to be identified, told me that employees had had “no warning whatsoever” of what was to come when they were called into a company meeting around 9:30 in the morning on Feb. 2.

The person said they were told company officials had made a decision “overnight” to close the company. Employees were told “we were free to go and they apologized for the inconvenience.”

There was “a lot of crying and emotion and shock,” the employee told me.

The person said that in addition to corporate staff, perhaps as many as 500 other employees lost their jobs.

The Salt Lake Tribune reported that one employee said company officials said they hoped to pay employees what salary they were owed within a few weeks.

But no severance packages were offered, according to the employee I spoke to. The company told employees they could file for unemployment.

AMERICAN FORK, Utah—Wendell Jacobson, a Utah real estate magnate who with his son provided the primary startup capital for Platinum Protection, is now facing charges from the U.S. Securities and Exchange Commission that he and his son have been running a $220 million real-estate Ponzi scheme—using their membership in the Mormon church to make connections and win the trust of potential investors.
Wendell and Allen Jacobson no longer have any involvement in Platinum Protection, based here and one of the major summer-sales-model companies, company CEO Jared Hallows told Security Systems News.